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Item 3. Legal Proceedings

2024-04-16 compared with 2023-04-19 · 112 added, 59 removed, 11 unchanged (94% of the section changed)

1 unchanged sentence

Legal case with FT Global Capital, Inc.

In January 2021, FT

Global Capital, Inc.

(“FT Global”), a former placement agent of the Company filed a lawsuit against the Company in the Superior

Court of Fulton County, Georgia.

In January 2021, FT Global

Capital, Inc.

(“FT Global”), a former placement agent of the Company filed a lawsuit against the Company in the Superior Court

of Fulton County, Georgia.

FT Global served the complaint upon the Company in January 2021.

2 unchanged sentences

agent agreement between FT Global and the Company in July 2020 which had a term of three months.

FT Global claims that the Company failed

to compensate FT Global for securities purchase transactions between December 2020 and April 2021, pursuant to the terms of the expired

exclusive placement agent agreement.

Allegedly, the exclusive placement agent agreement required the Company to pay FT Global for capital

received during the term of the agreement and for the 12-month period following the termination of the agreement involving any investors

that FT Global introduced and/or wall-crossed to the Company.

However, the Company believes the securities purchase transactions at issue

did not involve the one investor which FT Global introduced or wall-crossed to the Company during the term of the agreement.

claims approximately $7,000,000 in damages and attorneys’ fees.

The Company timely removed

the case to the United States District Court for the Northern District of Georgia (the (“Court) on February 9, 2021 based on diversity

of jurisdiction.

On March 9, 2021, the Company filed a motion to dismiss based on FT Global’s failure to state a claim which is

pending before the Court.

On March 23, 2021, FT Global filed its response to the Company’s motion to dismiss.

FT Global argues

that the Court should deny the Company’s motion to dismiss.

However, if the Court is inclined to grant the Company’s motion

to dismiss, FT Global requested that the Court permit it to file an amended complaint.

On April 8, 2021, the parties filed a Joint Preliminary

Report and Discovery Plan.

On April 12, 2021, the Court approved the Joint Preliminary Report and Discovery Plan and issued a Scheduling

Order placing this case on a six-month discovery tract.

FT Global claims that the Company

failed to compensate FT Global for securities purchase transactions between December 2020 and April 2021, pursuant to the terms of the

expired exclusive placement agent agreement.

Allegedly, the exclusive placement agent agreement required the Company to pay FT Global

for capital received during the term of the agreement and for the 12-month period following the termination of the agreement involving

any investors that FT Global introduced and/or wall-crossed to the Company.

However, the Company believes the securities purchase

transactions at issue did not involve the one investor which FT Global introduced or wall-crossed to the Company during the term of the

FT Global claims approximately $7,000,000 in damages and attorneys’ fees.

The Company timely removed the case to the United States District Court

for the Northern District of Georgia (the (“Court”) on February 9, 2021 based on diversity of jurisdiction.

On March 9, 2021,

the Company filed a motion to dismiss based on FT Global’s failure to state a claim which is pending before the Court.

23, 2021, FT Global filed its response to the Company’s motion to dismiss.

FT Global argues that the Court should deny the Company’s

motion to dismiss.

However, if the Court is inclined to grant the Company’s motion to dismiss, FT Global requested that the Court

permit it to file an amended complaint.

On April 8, 2021, the parties filed a Joint Preliminary Report and Discovery Plan.

2021, the Court approved the Joint Preliminary Report and Discovery Plan and issued a Scheduling Order placing this case on a six-month

discovery tract.

On April 30, 2021, the Company served FT Global with its Initial Disclosures.

On May 6, 2021, FT Global served the Company with its Initial Disclosures.

On May 17, 2021, FT Global served the Company with its First

Amended Initial Disclosures.

On November 10, 2021, the Court entered an Order granting the Company’s motion to dismiss FT Global’s

fraud claim and breach of contract claim as to the disclosure of its confidential and proprietary information.

The Court denied the Company’s

motion to dismiss FT Global’s i) breach of contract claim for failure to pay FT Global pursuant to the terms of the exclusive placement

agent agreement;

ii) claim for breach of the covenant of good faith and fair dealing;

and iii) claim for attorney’s fees, and the

court concluded that additional information can be obtained through discovery.

The Company timely filed an answer and defenses to FT

Global’s complaint on November 24, 2021.

On January 3, 2022 the Company propounded discovery requests upon FT Global, including

interrogatories and requests for production of documents.

On May 6, 2021, FT Global served the Company

with its Initial Disclosures.

On May 17, 2021, FT Global served the Company with its First Amended Initial Disclosures.

On November 10,

2021, the Court entered an Order granting the Company’s motion to dismiss FT Global’s fraud claim and breach of contract claim

as to the disclosure of its confidential and proprietary information.

The Court denied the Company’s motion to dismiss FT Global’s

i) breach of contract claim for failure to pay FT Global pursuant to the terms of the exclusive placement agent agreement;

ii) claim for

breach of the covenant of good faith and fair dealing;

and iii) claim for attorney’s fees, and the court concluded that additional

information can be obtained through discovery.

The Company timely filed an answer and defenses to FT Global’s complaint on November

On January 3, 2022 the Company propounded discovery requests upon FT Global, including interrogatories and requests for production

of documents.

On March 23, 2022, the Company propounded requests for admission upon FT Global.

On March 24, 2022, FT Global propounded discovery requests upon the Company, including requests for production of documents and requests

for admission.

On April 1, 2022, FT Global served its response to the Company’s requests for production of documents.

2022, FT Global served its responses to the Company’s interrogatories and requests for admissions.

On May 13, 2022, FT Global

produced documents in response to the Company’s requests for production of documents.

On June 3, 2022, the Company produced documents

in response to FT Global’s requests for production of documents.

On March 24, 2022, FT Global propounded

discovery requests upon the Company, including requests for production of documents and requests for admission.

On April 1, 2022, FT Global

served its response to the Company’s requests for production of documents.

On May 13, 2022, FT Global served its responses to the

Company’s interrogatories and requests for admissions.

On May 13, 2022, FT Global produced documents in response to the Company’s

requests for production of documents.

On June 3, 2022, the Company produced documents in response to FT Global’s requests for production

of documents.

On August 3, 2022, the Company took the deposition of FT Global.

On August 4, 2022, FT Global took the deposition of the Company.

On August 3, 2022, the Court granted the parties’ Consent Motion

to Extend Discovery Period extending the discovery period from August 5, 2022 to September 14, 2022 and the deadline to file dispositive

motions to October 12, 2022.

On October 12, 2022, the Company filed a motion for summary judgment on all claims asserted by FT Global

in this lawsuit.

On November 2, 2022, FT Global filed its opposition to the Company’s motion for summary judgment.

16, 2022, the Company filed its reply in support of its motion for summary judgement on all claims asserted by FT Global in this lawsuit.

The Company will continue to vigorously defend the action against FT Global.

On August 4, 2022, FT Global took the deposition of the

On August 3, 2022, the Court granted the parties’ Consent Motion to Extend Discovery Period extending the discovery period

from August 5, 2022 to September 14, 2022 and the deadline to file dispositive motions to October 12, 2022.

On October 12, 2022, the Company

filed a motion for summary judgment on all claims asserted by FT Global in this lawsuit.

On November 2, 2022, FT Global filed its opposition

to the Company’s motion for summary judgment.

On November 16, 2022, the Company filed its reply in support of its motion for summary

judgment on all claims asserted by FT Global in this lawsuit.

On August 31, 2023, the Court entered an Order denying the Company’s

motion for summary judgment.

On September 20, 2023, the parties filed a joint motion to extend the deadline to file the consolidated pretrial

order pending mediation of the case by the parties.

On September 21, 2023, the Court granted the parties’ joint motion to extend

the deadline to file the consolidated pretrial order to October 27, 2023.

On October 16, 2023, the parties mediated the case.

24, 2023, the parties filed another joint motion to extend the deadline to file the consolidated pretrial order.

On October 27, 2023,

the Court granted the parties’ joint motion to extend the deadline to file the consolidated pretrial order to November 17, 2023

and set the case for trial on January 8, 2024.

Subsequently, the Court approved an extension of the deadline to file a pretrial order

to December 1, 2023.

The Court has also rescheduled the trial to commence on April 8, 2024.

The trial began on April 8, 2024

and ended on April 11, 2024, on which date the jury returned a verdict in favor of FT Global and the Court entered a judgment awarding

FT Global $8,875,265.31.

On April 12, 2024, FT Global requested that the Court add $1,723,136.44 in prejudgment interest to the

judgment amount.

The Company will continue to vigorously defend the action against FT Global, including by appealing the judgment

to the United States Court of Appeals for the Eleventh Circuit.

On December 17, 2019,

the Company announced that it received a subpoena from the SEC’s Division of Enforcement requiring the Company to produce documents

and other information and the Company has cooperated with the SEC’s investigation and information request.

On July 3, 2023, the

SEC announced a settlement of the investigation with the Company.

Without admitting or denying the SEC’s findings, the Company has

consented to:

(i) cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and (3) of

the Securities Act, Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-13 and 13a-15(a) thereunder;

(ii) pay a civil money penalty in the amount of $1,650,000 to the Securities and Exchange Commission for transfer to the general

fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3) and the payment shall be made in the following installments:

the first installment of $150,000 shall be paid within ten (10) days of July 3, 2023 (the “Order Date”);

the second installment

of $375,000 shall be paid within 90 days of the Order Date;

the third installment of $375,000 shall be paid within 180 days of the Order

the fourth installment of $375,000 shall be made within 270 days of the Order Date;

and the last installment of $375,000 shall be

made within 360 days of the Order Date;

(iii) retain, within sixty (60) days of the Order Date, at Company’s own expense, a qualified

independent consultant (the “Consultant”) not unacceptable to the SEC staff, to test, assess, and review the Company’s

internal accounting controls and internal control over financial reporting (collectively, “review), and the Consultant, at the conclusion

of the review, which in no event shall be no more than 180 days after the Order Date, to submit a report of the Consultant to the Company

and the SEC staff and the report shall address the Consultant’s findings and shall include a description of the review performed,

the conclusions reached, and the Consultant’s recommendations for changes or improvements;

and (iv) adopt, implement, and maintain

all policies, procedures and practices recommended in the report of the Consultant within 120 days of receiving the report from the Consultant.

of the date of this report, the Company has made all installment payments of the penalties except for the last one which will due on 360

days of the Order Date.

On July 26, 2023, the Company also has engaged an independent consultant to test, assess, and review the

Company’s internal accounting controls and internal control over financial reporting.

The consultant has completed its test, assess

and review and issued a final report in December 2023.

ITEM 4 – MINE SAFETY DISCLOSURES

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings